2010 Supreme(SC) 195

2010 (2) Supreme 174
SUPREME COURT OF INDIA
G.S Singhvi and Asok Kumar Ganguly, JJ.
Securities & Exchange Board of India — Appellant
versus
Ajay Agarwal — Respondent
Civil Appeal No.1697 of 2005
Decided on : 25-02-2010

IMPORTANT POINTS
1. If the law affects matters of procedure, then prima facie it applies to all actions, pending as well as future.
2. Provisions of Section 11-B of Securities and Exchange Board of India Act, 1992 being procedural in nature can be applied retrospectively.

Headnote:Securities and Exchange Board of India Act, 1992- Section 11-B- Sections 4(3) and 11- Complaint filed against Trident Steel Limited that there was misstatement in prospectus filed by company at the time of public issue with regard to alleged non-disclosure of pledge of 7 lac 50 thousand shares held in the company by directors of the company to avail of working capital from Bank of Baroda- After investigation a show cause notice was issued-Ultimately Chairman of Board passed an order, under Section 4(3) read with Section 11 and Section 11B of SEBI Act, directing respondent Joint Managing Director of Company that he be restrained from associating with any corporate body in accessing securities market and also be prohibited from buying, selling or dealing in securities for a period of five years-Appeal thereagainst on plea that since alleged misconduct if any was for a period of time when Section 11-B was not on the statute book no direction could have been issued under Section 11-B for the alleged misconduct said to have been committed prior to introduction of Section 11-B-Said appeal was allowed by Appellate Tribunal holding that provision of Section 11-B cannot be invoked in respect of alleged misconduct which took place at a point of time when Section 11-B was not on the statute book-Appeal-Held there was no challenge to those provisions which came by way of amendment- In absence of any challenge to those provisions, it could not be said that even though Board is statutorily empowered to exercise functions in accordance with the amended law, its power to act under the law, as amended, will stand frozen in respect of any violation which might have taken place prior to the enactment of those provisions- It is nobody’s case that Board had exercised those powers in respect of a proceeding which was initiated prior to enactment of those provisions- In fact Board had issued show cause notice in terms of Section 11-B and considered the reply of respondent- In such a situation, there was no infraction in the procedure-Hence entire basis of order of Appellate Tribunal that provision of Section 11- B could not be applied retrospectively had been passed on an erroneous basis- Provisions of Section 11-B being procedural in nature can be applied retrospectively- Appellate Tribunal made a manifest error by not appreciating that Section 11-B is procedural in nature- It is a time honoured principle if the law affects matters of procedure, then prima facie it applies to all actions, pending as well as future-Order passed by Appellate Tribunal quashed while order of Chairman of Board upheld-Appeal allowed. (Paras 43 to 55)

       [AIR 1976 SC 2610],relied

        Interpretation of Statutes -No one has a vested right in any course of procedure- A person’s right of either prosecution or defence is conditioned by the manner prescribed for the time being by the law and if by the Act of Parliament, the mode of proceeding is altered, and then no one has any other right than to proceed under the alternate mode. (Paras 52, 53)

       AIR 1966 SC 1206 ,relied

       Facts of the Case :

        Question which arose for consideration in present appeal was whether Section 11-B of the Securities and Exchange Board of India Act, 1992 could be invoked by the Chairman of the Securities and Exchange Board of India in conjunction with Sections 4(3) and 11 for restraining the respondent from associating with any corporate body in accessing the securities market and prohibiting him from buying, selling or dealing in securities.

       Findings of the Court :

        It was held that there was no challenge to those provisions which came by way of amendment. In absence of any challenge to those provisions, it could not be said that even though Board is statutorily empowered to exercise functions in accordance with the amended law, its power to act under the law, as amended, will stand frozen in respect of any violation which might have taken place prior to the enactment of those provisions. It was nobody’s case that Board had exercised those powers in respect of a proceeding which was initiated prior to enactment of those provisions. In fact Board had issued show cause notice in terms of Section 11-B and considered the reply of respondent. In such a situation, there was no infraction in the procedure.Hence entire basis of order of Appellate Tribunal that provision of Section 11- B could not be applied retrospectively had been passed on an erroneous basis. Provisions of Section 11-B being procedural in nature can be applied retrospectively. Appellate Tribunal made a manifest error by not appreciating that Section 11-B is procedural in nature.It is a time honoured principle if the law affects matters of procedure, then prima facie it applies to all actions, pending as well as future.Order passed by Appellate Tribunal was quashed while order of Chairman of Board was upheld. Appeal was allowed.

       Result : Appeal allowed.